The bonds are considered a safe investment. The Los Angeles wildfires sparked concern that climate change is making them risky.
As wildfire tore through Los Angeles in January, a financial ratings company made a decision that could mark a crucial shift in how a trillion-dollar market assesses climate risk.
S&P Global Ratings downgraded the credit rating of the Los Angeles water and power utility, citing “the increasing frequency and severity” of wildfires and signaling a potential awakening of the nation’s $4 trillion dollar municipal bond market to climate risk.
Short-term trouble followed the Jan. 14 downgrade of the nation’s largest municipal utility. The bond values fell, default risk rose and some bondholders sold at a loss. If the utility issues new bonds soon, it will have to pay higher interest rates to compensate buyers for the heightened risk.
politico.com
By Thomas Frank | 02/25/2025 06:19 AM EST